JYOTI TRADERS, MUMBAI V. CIT CEN -IV, MUMBAI

ITSSA 62/MUM/2008

• Counselvise Citation: [2011] 124 COUNSELVISE.COM (IT) 8363 (ITAT-MUMBAI)
• Duration Of Justice: 3 year(s) 7 day(s)
• Appeal Type: Income Tax (Search & Seizure) Appeal
• Pronouncement Date: 20-05-2011
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: J
• Next Hearing Date: 12-05-2011
• Assessment Year: misc
• Appeal Filed On: 13-05-2008
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: MRS KU SUM INGALE
• Keywords: Bogus purchase; Search and seizure; Document seized; Opportunity of being heard; Principle of natural justice; Period of limitation; Corroborative evidences; Block assessment; Documents seized
• Section: 142(1); 263; 63; 132

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, MUMBAI BENCH J, MUMBAI BEFORE SHRI N.V.VASUDEVAN(J.M) & SHRI J.SUDHAKAR R EDDY (A.M) IT(SS) 62/MUM/08 & IT(SS) 111/MUM/2008 (BLOCK PERIOD 1/4/1996 TO 24/09/2002) M/S. JYOTI TRADERS, 50, BANK OF INDIA BUILDING, 85, SHEIK MEMON STREET, MUMBAI 400 002PAN PAN AABFJ 2986N (APPELLANT) VS. THE DCIT, CEN.CIR.47, MUMBAI. (RESPONDENT) IT(SS) 61/MUM/08 & IT(SS) 112/MUM/2008 (BLOCK PERIOD 1/4/1996 TO 24/09/2002) M/S. JAMNADAS NATHALAL & CO. 50, BANK OF INDIA BUILDING, 85, SHEIK MEMON STREET, MUMBAI 400 002PAN PAN: AAAFJ 1474 B (APPELLANT) VS THE DCIT, CEN.CIR.47, MUMBAI. (RESPONDENT) IT(SS) 60/MUM/08 & IT(SS) 110/MUM/2008 (BLOCK PERIOD 1/4/1996 TO 24/09/2002) M/S. CHOKSI NAVNITLAL & SONS, 145/5, SHEIK MEMON STREET, MUMBAI 400 002. PAN: AACFC 3597L (APPELLANT) VS. THE DCIT, CEN.CIR.47, MUMBAI 20. (RESPONDENT) ASSESSEES BY : SHRI SATISH MODY REVENUE BY : MRS. KUSUM INGALE ORDER IT(SS)60,61,62 ,110,111 &112/M/08 2 PER N.V.VASUDEVAN, J.M, IT SS A 62/MUM/08 & ITA NO.111/M/08: THESE ARE APPEALS BY THE ASSESSEE. THE CIRCUMSTANC ES UNDER WHICH THESE APPEALS ARISE FOR CONSIDERATION ARE AS FOLLOW S: THE ASSESSEE IS A PARTNERSHIP FIRM. IT DEALS IN B ULLION AND PRECIOUS METALS. THE PARTNERS OF THE ASSESSEE FIRM ARE (1) M/S.NOVICE INVESTMENTS PVT. LTD. (2) M/S.EXHALE INVESTMENTS PVT.LTD. AND ( 3) M/S. FANCIER INVESTMENTS PVT.LTD. ALL THE PARTNERS OF THE ASSES SEE FIRM WERE GROUP COMPANIES OF PAREKH GROUP IN WHICH MRS.NAINA PAREKH , MRS.KALAWATI PAREKH AND MRS. MEENA PAREKH ARE DIRECTORS. THERE WAS A SEARCH AND SEIZURE CONDUCTED U/S.132 OF THE INCOME TAX ACT, 19 61 (THE ACT)ON 24/09/2002 IN THE CASE OF M/S.PAREKH PLATINUM LIMIT ED, COVERING RESIDENTIAL AND BUSINESSS PREMISES BELONGING TO PAR EKH FAMILY. SINCE THE ASSESSEE WAS ALSO PART OF PAREKH GROUP, THE BUSINES S PREMISES OF THE ASSESSEE WAS ALSO SEARCHED ON 24/9/2002. 2. ACCORDING TO THE AO, IN THE COURSE OF SEARCH AND SEIZURE ACTION, VOLUMINOUS INCRIMINATING DOCUMENTS WERE FOUND AND S EIZED. MAINLY ASSESSEES BOOKS OF ACCOUNT WERE ALSO SEIZED IN THE FORM OF C.D.S AND HARD- DISK. THE CHRONOLOGY OF EVENTS THEREAFTER WAS AS F OLLOWS: A) ON 28.07.2003 A NOTICE U/S.158-BC OF THE ACT WAS IS SUED CALLING UPON THE ASSESSEE TO FILE RETURN OF INCOME FOR THE BLOCK PERIOD VIZ., 1.4.96 TO 24.9.2002. B) ON 22.4.2004, THE ASSESSEE FILED A NIL RETURN OF IN COME FOR THE BLOCK PERIOD. C) ON 11.6.2004 A NOTICE U/S.143(2) & 142(1) OF THE AC T WAS ISSUED BY THE AO FIXING THE CASE FOR HEARING ON 13.7.2004. D) ON 13.7.2004, THE ASSESSEE DID NOT ATTEND THE PROCE EDINGS. IT(SS)60,61,62 ,110,111 &112/M/08 3 E) ON 5.08.2004, THE AO, SENT A PROPOSAL TO THE COMMIS SIONER OF INCOME TAX(CIT) FOR APPOINTING A SPECIAL AUDITOR U/S.142(2 A) OF THE ACT TO CONDUCT SPECIAL AUDIT OF THE BOOKS OF ACCOUNTS OF T HE ASSESSEE. F) ON 12.8.2004, THE CIT GAVE HIS APPROVAL FOR THE PRO POSAL TO CONDUCT SPECIAL AUDIT OF THE ACCOUNTS OF THE ASSESSEE. G) ON 13.8.2004, THE AO INFORMED THE ASSESSEE THAT THE ASSESSEE SHOULD GET ITS BOOKS OF ACCOUNTS AUDITED BY THE SPECIAL AU DITOR BY 17.9.2004. H) ON 13.8.2004, THE AUTHORIZED REPRESENTATIVE OF THE ASSESSEE FILED A LETTER DATED 13.8.2004 BEFORE THE AO GIVING REPLY T O SOME OF THE QUERIES RAISED BY THE AO IN HIS NOTICE U/S.143(2) O F THE ACT DATED 11.6.2004. I) ON 16.8.2004, THE ASSESSEE FILED AN APPLICATION BEF ORE CIT POINTING OUT THAT THE ASSESSEE WAS NOT GIVEN OPPORTUNITY OF BEING HEARD BEFORE PASSING THE ORDER DIRECTING IT TO GET ITS BOOKS OF ACCOUNTS AUDITED BY A SPECIAL AUDITOR U/S.142(2A) OF THE ACT. FURTHER TH E ASSESSEE POINTED OUT THAT ALL THE BOOKS OF ACCOUNT HAVE BEEN SEIZED BY THE SEARCH PARTY AND ARE AVAILABLE ON SEALED CDS WITH THE AO. THE A O HAS NOT EVEN OPENED THESES CDS AS WE HAVE NEVER BEEN CALLED TO R EMAIN PRESENT WHILE THE SEALED CDS ARE OPENED FOR VERIFICATION. SINCE THE CDS WERE NOT OPENED IT WAS CLEAR THAT THE BOOKS OF ACCOUNTS HAVE NOT AT ALL BEEN EXAMINED BY THE AO. IT WAS POINTED OUT BY THE ASSE SSEE THAT THE CONDITION PRECEDENT FOR APPOINTING SPECIAL AUDITOR U/S.142(2A) OF THE ACT TO EXAMINE THE BOOKS OF ACCOUNTS, WAS FORMATION OF OPINION THAT THE ACCOUNTS ARE COMPLEX AND ACCORDINGLY REQUIRES S PECIAL AUDIT. THE ASSESSEE POINTED OUT THAT THE ORDER FOR SPECIAL AUD IT HAS BEEN PASSED WITHOUT APPLICATION OF MIND AND MECHANICALLY. NOT EVEN A SINGLE INSTANCE OF COMPLEXITY OF THE ACCOUNTS HAVE BEEN SP ECIFIED IN THE ORDER U/S.142(2A) OF THE ACT AND THE ORDER HAS BEEN PASSE D ONLY WITH A VIEW TO GAIN TIME FOR COMPLETION OF BLOCK ASSESSMENT. I N THIS REGARD IT IS WORTHWHILE TO MENTION THAT U/S158BE OF THE ACT, AN ORDER OF BLOCK ASSESSMENT U/S.158BC OF THE ACT HAS TO BE PASSED WI THIN 2 YEARS FROM THE END OF THE MONTH IN WHICH THE SEARCH ACTIO N U/S.132 OF THE ACT, CONCLUDED. IN THE CASE OF THE ASSESSEE THE SE ARCH TOOK PLACE ON 24.9.2002 AND THE TIME FOR COMPLETION OF THE BLOCK ASSESSMENT WAS GETTING BARRED BY 31.10.2004. THERE WAS NO PROGRES S IN THE ASSESSMENT TILL 5.8.2004 AND THEREFORE TO GAIN TIME THE AO HAS SENT A PROPOSAL FOR A SPECIAL AUDIT. AS PER THE PROVISO T O SEC.158BE OF THE IT(SS)60,61,62 ,110,111 &112/M/08 4 ACT, THE TIME FOR COMPLETION OF ASSESSMENT WILL GET AUTOMATICALLY EXTENDED BY THE TIME TAKEN FOR GETTING THE BOOKS AU DITED BY A SPECIAL AUDITOR U/S.142(2A) OF THE ACT (SUBJECT TO A MAXIMU M OF 80 DAYS). FURTHER AN ADDITIONAL PERIOD OF 60 DAYS WOULD ALSO BE AVAILABLE TO THE AO FROM THE DATE OF REPORT OF THE SPECIAL AUDIT FOR COMPLETING THE BLOCK ASSESSMENT. J) ON 30.8.2004, THE SPECIAL AUDITORS INFORMED THE AO THAT THE ASSESSEE IS NOT CO-OPERATED IN CARRYING OUT THE SPECIAL AUDI T. K) ON 31.8.2004 ANOTHER LETTER DATED 31.8.2004 BY THE AUTHORIZED REPRESENTATIVE OF THE ASSESSEE GIVING REPLY TO SOME OF THE QUERIES RAISED BY THE AO IN HIS NOTICE U/S.143(2) OF THE AC T DATED 11.6.2004. ACCORDING TO THE AO, THE ASSESSEE PROMISED TO PRODU CE WITNESSES ON 15.9.2004 BUT DID NOT DO SO. L) ON 16.9.2004 THE AO EXTENDED THE PERIOD FOR CARRYIN G OUT SPECIAL AUDIT U/S.142(2A) OF THE ACT, WHICH PERIOD WOULD EX PIRE ON 17.9.2004. THE PERIOD WAS EXTENDED TO 1.11.2004. M) ON 16.9.2004, THE ASSESSEE ADDRESSES ANOTHER LETTER TO THE CIT TO WITHDRAW THE ORDER FOR CARRYING OUT SPECIAL AUDIT U /S.142(2A) OF THE ACT. N) ON 8.10.2004, THE AO WANTED THE ASSESSEE TO PRODUCE WITNESSES SO THAT THE SEIZED CD AND HARD DISC CAN BE OPENED IN T HEIR PRESENCE. O) ON 18.10.2004, THE ASSESSEE SENT WITNESSES AND ON T HAT DATE THE SEIZED CDS AND HARD DISC WERE OPENED. P) ON 1.11.2004, THE AO EXTENDS THE PERIOD FOR COMPLET ION OF THE SPECIAL AUDIT U/S.142(2A) OF THE ACT, TO 31.12.2004. Q) ON 31.12.2004, THE AO AGAIN EXTENDS THE PERIOD FOR COMPLETION OF SPECIAL AUDIT U/S.142(2A) OF THE ACT, TO 7.2.2005. R) ON 10.2.2005, THE SPECIAL AUDITORS INFORM THE AO TH AT THE ASSESSEE HAS NOT CO-OPERATED OR RENDERED ANY ASSISTANCE NOR PRODUCED BOOKS OF ACCOUNTS TO CARRY OUT SPECIAL AUDIT U/S.142(2A) OF THE ACT AND THEREFORE THEY ARE UNABLE TO COMPLETE THE SPECIAL A UDIT. S) ON 7.4.2005, THE AO PASSED AN EX-PARTE BLOCK ASSESS MENT ORDER U/S.144(1)(B) OF THE ACT READ WITH SEC.158BC OF THE ACT. IT(SS)60,61,62 ,110,111 &112/M/08 5 3. WE WILL NOW SEE THE ADDITION MADE BY THE AO IN T HE BLOCK ASSESSMENT FRAMED U/S.158BC OF THE ACT READ WITH SEC.144(1)(B) OF THE ACT. 4. THE CASE OF THE AO WAS THAT THE ASSESSEE INDULGE D IN BOGUS PURCHASES TO THE TUNE OF RS. 93,94,951/-. IN THIS REGARD THE AO OBSERVED AS UNDER: 8.1 BOGUS PURCHASES: DURING THE COURSE OF SEARCH AT THE OFFICE CUM FACTORY PREMISES OF M/S. PAREKH PLATINUM LTD. AT 1 6B SAMHITA INDUSRIAL ESTATE, OFF ANDHERI KURLA ROAD, SAFEED PO OL, MUMBAI 400 072 ON 25/9/2002, A LOOSE PAPER FILE CONTAINING 352 PAGES, MARKED AS A-1 WAS FOUND AND SEIZED. 8.2 THIS FILE CONTAINS THE SALES INVOICES PERTAIN TO THE FOLLOWING GROUP CONCERNS OF M/S. PAREKH PLATINUM LTD. I) M/S. SONAL ENTERPRISES II) M/S. CHOKSHI NAVNITLAL & SONS III) M/S. JAMNADAS NATHALAL & CO. IV) M/S. JYOTI TRADERS V) M/S. PAREKH PLATINUM LTD. 83. ALL THE ABOVE SALES HAVE BEEN TREATED AS SECON D SALE AND THE SALES TAX HAS NOT BEEN CHARGED ON THESE TRANSACTIONS. TH E ACCOUNTS OF ALL THE CONCERNS EXCEPT M/S. CHOKSHI NAVNITLAL & SONS ARE MAINTAINED AT THE OFFICE OF M/S. PAREKH PLATINUM LTD. AS HIGHLIG HTED IN THE STOCK REGISTER SEIZED AT THE PREMISES THESE TRANSACTIONS ARE NOT REFLECTED IN THEIR STOCK REGISTER. THERE IS NO EVIDENCE THAT TH E GOODS WERE PHYSICALLY MOVED FROM ONE CONCERN TO ANOTHER. THES E BILLS ARE IN FACT A PART OF THE CIRCULAR TRANSACTIONS AMONGST THE VAR IOUS GROUP CONCERNS AND THEREBY TO BOOK BOGUS PURCHASE SO AS TO REDUCE ITS TAXABLE INCOME. 8.4 PAGES 246,258,268, AND 270 ARE THE SALE INVOIC ES OF SONAL ENTERPRISES TO M/S. JYOTI TRADERS I.E. THE ASSESSEE FIRM. THESE PAGES SHOW THAT THE ASSESSEE HAS MADE PURCHASES FROM SONA L ENTERPRISES OF A TOTAL AMOUNT OF RS.93,94,951/-. SINCE THE ASSESS EE HAS FAILED TO PRODUCE ANY SUPPORTING EVIDENCES AND DURING THE SEA RCH ALSO IT WAS ESTABLISHED THAT NO ACTUAL STOCK WAS TRANSFERRED FR OM SONAL ENTERPRISES TO THE ASSESSEE. THEREFORE, IN VIEW OF THE ABOVE AND INSPITE OF AVAI LING SEVERAL OPPORTUNITIES THE ASSESSEE FAILED TO COOPERATE WITH THE DEPARTMENT AND THE SPECIAL AUDITORS TO EXPLAIN THESE ANOMALIES. H ENCE THE ENTIRE PURCHASES FROM M/S. SONAL ENTERPRISES TOTALLING TO RS.93,94,951/- IS BEING TREATED AS BOGUS EXPENDITURE OF THE ASSESSEE FOR THE BLOCK PERIOD IT(SS)60,61,62 ,110,111 &112/M/08 6 AND THE ENTIRE AMOUNT IS ADDED AS UNDISCLOSED INCOM E OF THE ASSESSEE FOR THE BLOCK PERIOD. 5. BEFORE THE AO, THE ASSESSEE RAISED A PLEA THAT T HE ASSESSMENT ORDER DATED 7.4.2005 PASSED BY THE AO WOULD BE BARRED BY LIMITATION OF TIME AS LAID DOWN IN SEC.158BE OF THE ACT. IN THIS REGARD IT WOULD BE APPROPRIATE TO NARRATE THOSE PROVISIONS. THE PROVISIONS OF SEC.15 8BE OF THE ACT, READS AS FOLLOWS: SEC.158BE : TIME LIMIT FOR COMPLETION OF BLOCK ASS ESSMENT. (1) THE ORDER UNDER SECTION 158BC SHALL BE PASSED (A) .. (B) WITHIN TWO YEARS FROM THE END OF THE MONTH IN WHICH THE LAST OF THE AUTHORISATIONS FOR SEARCH UNDER SECTION 132 OR FOR REQUISITION UNDER SECTION 132A, AS THE CASE MAY BE, WAS EXECUTED IN C ASES WHERE A SEARCH IS INITIATED OR BOOKS OF ACCOUNT OR OTHER DO CUMENTS OR ANY ASSETS ARE REQUISITIONED ON OR AFTER THE 1ST DAY OF JANUARY, 1997. (2) THE PERIOD OF LIMITATION FOR COMPLETION OF BLOC K ASSESSMENT IN THE CASE OF THE OTHER PERSON REFERRED TO IN SECTION 158 BD SHALL BE. EXPLANATION 1 : IN COMPUTING THE PERIOD OF LIMITATI ON FOR THE PURPOSES OF THIS SECTION, THE PERIOD (I) DURING WHICH THE ASSESSMENT PROCEEDING IS STAY ED BY AN ORDER OR INJUNCTION OF ANY COURT, OR (II) COMMENCING FROM THE DAY ON WHICH THE ASSESSIN G OFFICER DIRECTS THE ASSESSEE TO GET HIS ACCOUNTS AUDITED UNDER SUB- SECTION (2A) OF SECTION 142 AND ENDING ON THE DAY ON WHICH THE ASSE SSEE IS REQUIRED TO FURNISH A REPORT OF SUCH AUDIT UNDER THAT SUB-SE CTION, SHALL BE EXCLUDED. PROVIDED THAT WHERE IMMEDIATELY AFTER THE EXCLUSION OF THE AFORESAID PERIOD, THE PERIOD OF LIMITATION REFERRED TO IN SUB -SECTION (1) OR SUB- SECTION (2) AVAILABLE TO THE ASSESSING OFFICER FOR MAKING AN ORDER UNDER CLAUSE (C) OF SECTION 158BC IS LESS THAN SIXTY DAYS , SUCH REMAINING PERIOD SHALL BE EXTENDED TO SIXTY DAYS AND THE AFOR ESAID PERIOD OF LIMITATION SHALL BE DEEMED TO BE EXTENDED ACCORDING LY. EXPLANATION 2 : FOR THE REMOVAL OF DOUBTS, IT IS HE REBY DECLARED THAT THE AUTHORISATION REFERRED TO IN SUB-SECTION (1) SH ALL BE DEEMED TO HAVE BEEN EXECUTED, (A) IN THE CASE OF SEARCH, ON THE CONCLUSION OF SE ARCH AS RECORDED IN THE LAST PANCHNAMA DRAWN IN RELATION TO ANY PERSON IN WHOSE CASE THE WARRANT OF AUTHORISATION HAS BEEN ISSUED; IT(SS)60,61,62 ,110,111 &112/M/08 7 (B) IN THE CASE OF REQUISITION UNDER SECTION 132A, ON THE ACTUAL RECEIPTS OF THE BOOKS OF ACCOUNT OR OTHER DOCUMENTS OR ASSET S BY THE AUTHORISED OFFICER. 6. IT IS NOT IN DISPUTE THAT THE PROVISIONS OF SECT ION 158BE(1)(B) APPLIES TO THE PRESENT CASE AS THE SEARCH WAS CONDUCTED ON 24. 9.2002. THE PERIOD OF LIMITATION FOR THE PASSING THE ORDER OF BLOCK ASSES SMENT UNDER THOSE PROVISIONS READ WITH EXPLANATION-2 WOULD EXPIRE ON 31.10.2004 AND THIS IS ADMITTED BY THE AO IN THE ORDER OF ASSESSMENT AS WE LL. THE PERIOD TO BE EXCLUDED AS PER EXPLANATION 1(II) OF SECTION 158BE IS THE DAY FROM WHICH THE ASSESSING OFFICER DIRECTS THE ASSESSEE TO GET HIS A CCOUNTS AUDITED UNDER SUB- SECTION (2A) OF SECTION 142 AND ENDING ON THE DAY O N WHICH THE ASSESSEE IS REQUIRED TO FURNISH A REPORT OF SUCH AUDIT UNDER TH AT SUB-SECTION, SHALL BE EXCLUDED. NOW WE SHALL REFER TO THE PROVISIONS OF S ECTION 142 IN SO FAR AS THEY ARE MATERIAL FOR THE PRESENT CASE. SEC.142: ENQUIRY BEFORE ASSESSMENT. (1) FOR THE PURPOSE OF MAKING AN ASSESSMENT UNDER T HIS ACT,... (2) FOR THE PURPOSE OF .. (2A) IF, AT ANY STAGE OF THE PROCEEDINGS BEFORE HIM , THE ASSESSING OFFICER, HAVING REGARD TO THE NATURE AND COMPLEXITY OF THE ACCOUNTS OF THE ASSESSEE AND THE INTEREST OF THE REVENUE, IS OF THE OPINION THAT IT IS NECESSARY SO TO DO, HE MAY, WITH THE PREVIOUS APPRO VAL OF THE CHIEF COMMISSIONER OR COMMISSIONER, DIRECT THE ASSESSEE T O GET THE ACCOUNTS AUDITED BY AN ACCOUNTANT, AS DEFINED IN TH E EXPLANATION BELOW SUB-SECTION (2) OF SECTION 288, NOMINATED BY THE CHIEF COMMISSIONER OR COMMISSIONER IN THIS BEHALF AND TO FURNISH A REPORT OF SUCH AUDIT IN THE PRESCRIBED FORM DULY SIGNED AN D VERIFIED BY SUCH ACCOUNTANT AND SETTING FORTH SUCH PARTICULARS AS MA Y BE PRESCRIBED AND SUCH OTHER PARTICULARS AS THE ASSESSING OFFICER MAY REQUIRE. (2B) THE PROVISIONS OF SUB-SECTION (2A) SHALL HAVE EFFECT NOTWITHSTANDING THAT THE ACCOUNTS OF THE ASSESSEE H AVE BEEN AUDITED UNDER ANY OTHER LAW FOR THE TIME BEING IN FORCE OR OTHERWISE. (2C) EVERY REPORT UNDER SUB-SECTION (2A) SHALL BE F URNISHED BY THE ASSESSEE TO THE ASSESSING OFFICER WITHIN SUCH PERIO D AS MAY BE SPECIFIED BY THE ASSESSING OFFICER : PROVIDED THAT THE ASSESSING OFFICER MAY, ON AN APPL ICATION MADE IN THIS BEHALF BY THE ASSESSEE AND FOR ANY GOOD AND SU FFICIENT REASON, EXTEND THE SAID PERIOD BY SUCH FURTHER PERIOD OR PE RIODS AS HE THINKS FIT; SO, HOWEVER, THAT THE AGGREGATE OF THE PERIOD ORIGINALLY FIXED AND IT(SS)60,61,62 ,110,111 &112/M/08 8 THE PERIOD OR PERIODS SO EXTENDED SHALL NOT, IN ANY CASE, EXCEED ONE HUNDRED AND EIGHTY DAYS FROM THE DATE ON WHICH THE DIRECTION UNDER SUB-SECTION (2A) IS RECEIVED BY THE ASSESSEE. (2D) THE EXPENSES OF, . (3) (4) .. 7. A READING OF SUB-SECTION (2A) WOULD SHOW THAT TH E ASSESSING OFFICER IS REQUIRED TO DIRECT THE ASSESSEE TO OBTAIN AN AUDIT REPORT WITHIN A SPECIFIED TIME HAVING REGARD TO THE NATURE AND COMPLEXITY OF THE ACCOUNTS OF THE ASSESSEE AND HAVING REGARD TO THE INTEREST OF THE R EVENUE. THE CONSEQUENCES OF THE ASSESSEE NOT ADHERING TO THE TIME LIMIT FIXE D BY THE ASSESSING OFFICER UNDER SECTION 142(2A) IS THAT THE ASSESSING OFFICER CAN PROCEED TO MAKE A BEST JUDGMENT ASSESSMENT IN TERMS OF SECTION 144(1) (B) WHICH READS AS FOLLOWS : SEC.144: BEST JUDGMENT ASSESSMENT. (1) IF ANY PERSON (A) ................... (B) FAILS TO COMPLY WITH ALL THE TERMS OF A NOTICE ISSUED UNDER SUB- SECTION (1) OF SECTION 142 OR FAILS TO COMPLY WITH A DIRECTION ISSUED UNDER SUB-SECTION (2A) OF THAT SECTION, OR (C) .................. THE ASSESSING OFFICER, AFTER TAKING INTO ACCOUNT AL L RELEVANT MATERIAL WHICH THE ASSESSING OFFICER HAS GATHERED, SHALL, AF TER GIVING THE ASSESSEE AN OPPORTUNITY OF BEING HEARD, MAKE THE AS SESSMENT OF THE TOTAL INCOME OR LOSS TO THE BEST OF HIS JUDGMENT AN D DETERMINE THE SUM PAYABLE BY THE ASSESSEE ON THE BASIS OF SUCH ASSESS MENT. 8. ACCORDING TO THE ASSESSEE THE TIME LIMIT FIXED B Y THE ASSESSING OFFICER UNDER SECTION 142(2A) OF THE ACT CANNOT BE SAID TO BE ONLY DIRECTORY. ACCORDING TO THE ASSESSEE, SECTION 142(2A)OF THE AC T, SPEAKS IN TERMS IMPERATIVE AND THE LANGUAGE PERMITS OF NO RELAXATIO N OF THE RIGIDITY OF THE RULE OF TIME LIMIT LAID DOWN THEREIN EXCEPT TO THE EXTENT STATED IN SECTION 142(2C). THEREFORE, SECTION 142(2A) SHOULD BE APPLI ED IN ITS UNDILUTED FORM, DISREGARDING THE CONSEQUENCES. THE ASSESSEE FURTHER SUBMITTED THAT A READING OF PROVISIONS OF SECTION 142(2C) WOULD ALSO SUGGEST THAT THE ASSESSEE SHALL OBTAIN THE AUDIT REPORT WITHIN THE PERIOD ORI GINALLY FIXED. EXTENSION OF IT(SS)60,61,62 ,110,111 &112/M/08 9 TIME IS ALLOWED ONLY ON AN APPLICATION BY THE ASSES SEE IN THIS REGARD AND ONLY WHEN THE ASSESSEE SHOWS GOOD AND SUFFICIENT CA USE. EVEN UNDER SUCH CIRCUMSTANCE THE MAXIMUM PERIOD INCLUDING THE ORIGI NALLY PERIOD AND THE EXTENDED PERIOD CANNOT EXTEND BEYOND 180 DAYS FROM THE DATE ON WHICH THE ASSESSEE RECEIVES DIRECTION IN THIS REGARD FROM THE ASSESSING OFFICER. ACCORDING TO THE ASSESSEE, A PLAIN READING OF THE A BOVE PROVISION MAKES IT CLEAR THAT FIRSTLY IT IS THE AO WHO FIXES THE TIME LIMIT FOR OBTAINING AND FURNISHING OF THE REPORT OF SPECIAL AUDIT BY THE AS SESSEE. SECONDLY, IT IS ONLY THE AO WHO CAN EXTEND THE TIME LIMIT FOR FURNISHING THE REPORT OF SPECIAL AUDIT BY THE ASSESSEE. THE AO CAN DO SO, ONLY ON A N APPLICATION BY THE ASSESSEE AND ON THE ASSESSEE SHOWING GOOD AND SUFFI CIENT CAUSE. THIRDLY, EVEN THE AO CANNOT EXTEND THE TIME LIMIT BEYOND ON AGGREGATE PERIOD OF 180 DAYS FROM THE DATE ON WHICH THE DIRECTION U/S 142(2 A) IS RECEIVED BY THE ASSESSEE. ACCORDING TO THE ASSESSEE, THE ABOVE PRO VISIONS HAVE TO BE STRICTLY CONSTRUED BECAUSE THE CONSEQUENCES OF THE ASSESSEE NOT COMPLYING WITH THE DIRECTIONS OF THE AO, EMPOWERS THE AO TO PROCEED TO MAKE A BEST JUDGMENT ASSESSMENT IN TERMS OF S.144 (1)(B) OF THE ACT. AC CORDING TO THE ASSESSEE, ANOTHER REASON FOR A STRICT CONSTRUCTION OF THE ABO VE PROVISIONS WOULD BE THAT THE TIME LIMIT FOR COMPLETION OF ASSESSMENT WO ULD GET ENLARGED BY THE PERIOD TAKEN FOR OBTAINING OF THE REPORT OF THE SPE CIAL AUDIT AND THE PROVISIONS OF S.142 (2A) SHOULD NOT BE USED AS A ME ANS TO GET THE BENEFIT OF AN EXTENDED PERIOD OF LIMITATION BY THE AO. 9. IT WAS SUBMITTED BY THE ASSESSEE THAT ADMITTEDLY IN THIS CASE THE AUDIT REPORT WAS ORIGINALLY DIRECTED TO BE FILED ON OR BE FORE 17.9.2004 BUT NO EXTENSION OF TIME WAS SOUGHT BY THE ASSESSE. THE A O HAS SUO MOTTO EXTENDED THE TIME LIMIT FOR COMPLETION OF THE AUDIT BY THE SPECIAL AUDITOR APPOINTED U/S.142(2A) OF THE ACT. 10. IT WAS ALSO SUBMITTED THAT IN TERMS OF THE PROV ISIONS OF SECTION 158BE EXPLANATION 1(II) THE PERIOD TO BE EXCLUDED WOULD C OMMENCE FROM THE DATE IT(SS)60,61,62 ,110,111 &112/M/08 10 ON WHICH THE ASSESSING OFFICER DIRECTS THE ASSESSEE TO GET HIS ACCOUNTS AUDITED AND THE ENDING ON THE DAY ON WHICH THE ASSE SSEE IS REQUIRED TO FURNISH A REPORT OF SUCH AUDIT. THE LAST DAY ON WHI CH THE AUDIT REPORT IS REQUIRED TO BE FURNISHED IS 17.9.2004. THUS THE PER IOD TO BE EXCLUDED IS ONLY FROM 13.8.2004 TO 17.9.2004 VIZ., 34 DAYS. THE PERI OD FOR COMPLETION OF ASSESSMENT WOULD STAND EXTENDED TO 31.10.2004 + 34 DAYS VIZ., 5.12.2004. SINCE BETWEEN 17.9.2004 (THE DATE ON WHICH THE ASSE SSEE SHOULD HAVE OBTAINED THE REPORT OF SPECIAL AUDIT U/S.142(2A) OF THE ACT AS ORIGINALLY FIXED BY THE AO) AND THE LAST DAY FOR COMPLETION OF THE B LOCK ASSESSMENT U/S.158BE WAS LESS THAN 60 DAYS, THE AO WOULD GET F URTHER TIME OF 60 DAYS IN TERMS OF THE PROVISO BELOW EXPLN.1 TO SEC.158BE OF THE ACT. THUS ACCORDING TO THE ASSESSEE, THE AO OUGHT TO HAVE COM PLETED THE ASSESSMENT ON OR BEFORE 5.1.2005. SINCE THE ASSESSMENT ORDER WAS PASSED ON 7.4.2005, IT WAS BARRED BY TIME. IT WAS THE SUBMISSION OF TH E ASSESSEE THAT THE PERIOD OF EXTENSION SUO MOTTO BY THE AO TO COMPLETE THE SP ECIAL AUDIT SHOULD NOT BE EXCLUDED IN COMPUTING THE PERIOD OF LIMITATION BECA USE THE AO HAS NO SUCH POWERS TO EXTEND THE PERIOD FOR COMPLETION OF THE A UDIT SUO MOTTO. 11. THE STAND OF THE REVENUE THAT THE PERIOD FROM 1 3.8.2004 TILL 7.2.2005, VIZ., THE DATE ON WHICH THE FINAL EXTENSION OF TIME FOR FURNISHING AUDIT REPORT EXPIRED HAS TO BE EXCLUDED AND FURTHER A PERIOD OF 60 DAYS HAS TO BE ADDED IN TERMS OF THE PROVISO BELOW EXPLN.1 TO SEC.158BE OF THE ACT. IN THAT EVENT THE PERIOD OF LIMITATION WOULD EXPIRE ON 7.4.2005 A ND THE ORDER OF ASSESSMENT HAS BEEN PASSED WITHIN THE PERIOD OF LIM ITATION. 12. WITHOUT PREJUDICE THE ABOVE CONTENTION, THE ASS ESSEE ALSO SUBMITTED THAT THE AO DID NOT RECORD ANY SATISFACTION REGARDI NG THE COMPLEXITY OF THE ACCOUNTS OF THE ASSESSEE WHICH IS A CONDITION PRECE DENT FOR APPOINTMENT OF A SPECIAL AUDIT U/S.142(2A) OF THE ACT. ACCORDING TO THE ASSESSEE, THE PROVISIONS OF SECTION 142(2A) ARE ONLY TO ENABLE TH E ASSESSING OFFICER TO IT(SS)60,61,62 ,110,111 &112/M/08 11 OBTAIN REPORT OF AN AUDITOR WHERE OWING TO COMPLEX NATURE OF THE ACCOUNTS THERE IS A POSSIBILITY OF A LOSS TO THE REVENUE. 13. BEFORE WE DEAL WITH THE ORDER OF THE AO ON THIS ISSUE, WE HAVE TO MAKE IT CLEAR THAT THE ASSESSEE NEVER FILED ANY APPLICAT ION FOR EXTENSION OF TIME TO GET THE SPECIAL AUDIT COMPLETED. THE ASSESSEE HAS ALL ALONG BEEN ONLY CHALLENGING THE DIRECTION TO CONDUCT THE SPECIAL AU DIT ON THE GROUND THAT THE REQUIRED SATISFACTION OF COMPLEXITY OF ACCOUNTS AND LOSS TO THE REVENUE BY REASON OF THE COMPLEXITY OF ACCOUNTS DOES NOT EXIST . 14. ON THIS ISSUE, THE AO HELD THAT THE ASSESSEES LETTER TO THE CIT ASKING FOR REVOKING THE ORDER OF THE AO TO CARRY OUT SPECI AL AUDIT U/S.142(2A) OF THE ACT, AND FORWARDING SUCH COPIES TO THE AO WAS AN AP PLICATION BY THE ASSESSEE SEEKING EXTENSION OF TIME FOR CARRYING OUT THE SPECIAL AUDIT. THIS CONCLUSION OF THE AO, AS WE HAVE POINTED OUT IN THE EARLIER PARAGRAPH IS NOT CORRECT. THE ASSESSEE NEVER ACCEPTED THE ORDER OF THE AO FOR CARRYING OUT SPECIAL AUDIT AND WAS CHALLENGING THE SAME. THE AS SESSEE NEVER SOUGHT EXTENSION OF TIME AND THE FINDING OF THE AO IN THIS REGARD, IS WITHOUT BASIS AND NOT CORRECT. 15. THE AO THEREAFTER CONTRADICTED HIMSELF BY SAYIN G THAT HE HAS THE POWER TO GRANT SUO MOTTO EXTENSION OF TIME AS LAID DOWN BY THE HONBLE PUJAB & HARYANA HIGH COURT IN THE CASE OF JAGATJIT SUGAR MILLS CO. LTD. 210 ITR 468 (P & H)WHEREIN IT WAS LAID DOWN THAT THE AO HAS POWER TO GRANT EXTENSION OF TIME FOR CARRYING OUT SPECIAL AUDIT SU O MOTTO. THE AO ALSO HELD THAT THE ASSESSEE DID NOT CO-OPERATE IN COMPLETING THE SPECIAL AUDIT AND ULTIMATELY NO SPECIAL AUDIT COULD BE CARRIED OUT. THEREAFTER THE AO JUSTIFIED HIS ACTION IN PROCEEDING TO MAKE AN ASSESSMENT U/S. 144(1)(B) OF THE ACT AS FOLLOWS: IT(SS)60,61,62 ,110,111 &112/M/08 12 7.5 IN COURSE OF EXAMINATION OF THE SEIZED DOCUME NTS, THE MATERIALS COLLECTED DURING THE POST SEARCH INVESTIGATION, ST ATEMENTS OF VARIOUS CONCERNED PERSONS, CORRESPONDENCES MADE WITH THE AS SESSEE AND THE SPECIAL AUDITORS AND ALL THE RELEVANT MATERIALS GAT HERED, THE UNDISCLOSED INCOME OF THE ASSESSEE IS ASSESSED AS P ER THE BEST JUDGMENT OF THE UNDERSIGNED UNDER SECTION 144(1)(B) OF THE I.T. ACT, AS THE ASSESSEE FAILED TO COMPLY WITH THE DIRECTIONS ISSUED U/S. 142(2A) OF THE I.T. ACT, 1961. 16. ON THE ISSUE OF LIMITATION AND SATISFACTION OF CONDITIONS FOR ORDERING SPECIAL AUDIT, THE AO HELD AS FOLLOWS: 9.2 IT IS PERTINENT TO MENTION THAT THE SEARCH A CTION U/S. 132(1) OF THE I.T. ACT WAS CARRIED OUT ON 24/09/2002. THE A SSESSEE WAS DIRECTED ON 13/8/2004 UNDER SECTION 142(2A) OF THE I.T. ACT TO ALLOW M/S. BHUTA SHAH & CO. C.AS TO CARRY OUT THE REQUIRE D AUDIT. THE ASSESSEES CASE WAS GETTING BARRED BY LIMITATION OF TIME ON 31/10/2004. AS PER PROVISO TO SECTION 142(2C) OF T HE I.T. ACT, THE TIME LIMIT WAS EXTENDED TWICE, SO AS TO SUBMIT THE AUDIT REPORT ON 7/2/2005 BEFORE THE ASSESSING OFFICER AS THE ASSESS EES APPLICATION, CITING REASONS, FOR CANCELLATION OF SPECIAL AUDIT W AS PENDING WITH THE HIGHER AUTHORITIES. HOWEVER, THE AGGREGATE OF THE PERIOD ORIGINALLY FIXED AND THE PERIODS SO EXTENDED DID NOT EXCEED ON E HUNDRED AND EIGHT DAYS FROM THE DATE ON WHICH THE DIRECTION UN DER SUB SECTION (2A) IS RECEIVED BY THE ASSESSEE. 9.3 HOWEVER, AS PER EXPLANATION 1(II) TO SECTION 1 58 BE OF THE I.T. ACT THE PERIOD COMMENCING FROM THE DAY ON WHICH THE ASS ESSING OFFICER DIRECTS THE ASSESSEE TO GET ITS ACCOUNTS AUDITED U/ S. 142(2A) AND ENDING ON THE DAY ON WHICH THE ASSESSEE IS REQUIRED TO FURNISH A REPORT OF SUCH AUDIT UNDER THAT SUB SECTION SHALL B E EXCLUDED. ACCORDINGLY THE PERIOD FROM 13/8/2004 TO 7/2/2005 I .E. 180 DAYS NEEDS TO BE EXCLUDED. ACCORDINGLY, THE TIME LIMIT GETS EXTENDED FROM 13/08/2004 BY 180 DAYS I.E. ON 7/2/2005. AS PER PR OVISO TO SECTION 158BE OF THE I.T. ACT 1961, WHERE IMMEDIATELY AFTE R THE EXCLUSION OF THE AFORESAID PERIOD, THE PERIOD OF LIMITATION REFE RRED TO IN SUB-SECTION (1) OR SUB SECTION (2) AVAILABLE TO THE ASSESSING O FFICER FOR MAKING AN ORDER UNDER CLAUSE (C) OF SECTION 158 BC IS LESS TH AN SIXTY DAYS, SUCH REMAINING PERIOD SHALL BE EXTENDED TO SIXTY DAYS AN D THE AFORESAID PERIOD OF LIMITATION SHALL BE DEEMED TO BE EXTENDED ACCORDINGLY.. THEREFORE, IN THIS CASE AFTER THE EXCLUSION OF THE PERIOD OF AUDIT OF 180 DAYS, THE PERIOD OF LIMITATION REFERRED TO IN SECTI ON 158BE (1) OF THE I.T. ACT AVAILABLE TO THE AO FOR MAKING AN ORDER IS 79 D AYS. THEREFORE, THE TIME LIMIT FOR COMPLETION OF BLOCK ASSESSMENT IS UP TO 27/04/2005. IT(SS)60,61,62 ,110,111 &112/M/08 13 9.4 THE ASSESSEE HAD ALSO RAISED THE ISSUE OF TIME BARRING DATE BEFORE THE HIGHER AUTHORITIES AND THE RELEVANT PROVISIONS OF THE I.T. ACT 1961 AND THE PROVISIONS OF SECTION 158BE OF THE I.T. ACT WAS DULY EXPLAINED. THUS IT IS APPARENT THAT, THE RELEVANT FACTS IN RES PECT OF THE TIME BARRING DATES OF THE INSTANT BLOCK PROCEEDINGS HAVE BEEN DISCUSSED WITH THE AUTHORIZED REPRESENTATIVE OF THE ASSESSEE ON DIFFERENT OCCASIONS. THEREFORE, THE LETTER FILED BY THE ASSE SSEE ON 04/04/2005 IS UNWARRANTED. IT IS FURTHER PROVED BEYOND DOUBT THA T THE ASSESSEE IS INTERESTED ON DELAYING THE PROCEEDINGS AND NOT CONC ERNED ABOUT COMPLYING WITH THE PROVISIONS OF I.T. ACT 1961. 10. THOUGH THE ASSESSEE HAS BEEN AVAILING REASONAB LE OPPORTUNITIES OF BEING HEARD, THERE HAS NOT BEEN A SINGLE INSTANCE W HEN IT HAS MADE EFFORTS TO EXPLAIN THE RELEVANT ISSUES, AS EMERGED FROM THE SCRUTINY OF THE SEIZED MATERIAL AND STATEMENT OF CONCERNED PEO PLE WORKING FOR THE ASSESSEE AND EVEN DEFIED THE DIRECTIONS GIVEN UNDER SECTION 142(2A) OF THE I.T. ACT 1961. THIS RESULTED INTO THE MANDATOR Y COMPLETION OF THE ASSESSMENT PROCEEDINGS U/S. 144(1)(B) OF THE I.T. A CT 1961. THEREFORE, THE UNDERSIGNED HAS NO ALTERNATIVE BUT TO USE THE MATERIALS ON RECORD AND ASSESS THE CONCEALED INCOME OF THE ASSESSEE AS PER HIS BEST JUDGMENT. 10.1 HERE IT WOULD BE RELEVANT TO QUOTE THE JUDGEME NT OF ALLAHABAD HIGH COURT IN THE CASE OF M/S. SAHARA INDIA MUTUAL BENEFIT COMPANY LTD. VS. CIT (269 ITR 563) THAT EVEN THOUGH WHEN TH E ASSESSEE DID NOT PRODUCE IT BOOKS OF ACCOUNTS BEFORE THE ASSESSING O FFICER, IT WAS A MATTER OF SATISFACTION OF THE REVENUE AUTHORITIES C ONCERNED THAT THEY HAVE ARRIVED AT A DEFINITE CONCLUSION ON THE BASIS OF AVAILABLE MATERIAL AND EXERCISE THEIR POWERS UNDER SECTION 142(2A) OF THE I.T. ACT. IT FURTHER HELD THAT A PERSON CANNOT BE PERMITTED TO G AIN, ON ACCOUNT OF HIS OWN FAULT. IF THE ASSESSEE DELIBERATELY, KNOWI NG THE CONSEQUENCES, REFUSES TO PRODUCE THE BOOKS OF ACCOUNTS, THE ASSES SEE CANNOT BE PERMITTED TO RAISE A HUE AND CRY THAT THE ACCOUNT B OOKS WERE NOT PERUSED BY THE AO BEFORE PASSING THE ORDER U/S. 142 (2A) OF THE I.T. ACT. 17. AGAINST THE ORDER OF THE AO DATED 7.4.2005, THE ASSESSEE FILED APPEAL BEFORE CIT(A) ON 6.5.2005(WRONGLY MENTIONED AS 6.5. 2008 IN THE ORDER OF CIT(A)). IN THE GROUNDS OF APPEAL AMONG OTHER GROU NDS THE ASSESSEE ALSO CHALLENGED THE DIRECTION TO CONDUCT SPECIAL AUDIT U /S.142(2A) OF THE ACT AND IT(SS)60,61,62 ,110,111 &112/M/08 14 ALSO THE VALIDITY OF THE ORDER OF ASSESSMENT ON THE GROUND THAT IT IS BARRED BY LIMITATION OF TIME AS LAID DOWN IN SEC.158 BE OF TH E ACT. 18. ON 18.1.2008, THE CIT(CENTRAL)-IV. MUMBAI, IN EXERCISE OF HIS POWERS OF REVISION U/S.263 OF THE ACT ISSUED A SHOW CAUSE NOTICE TO THE ASSESSEE CALLING UPON THE ASSESSEE TO SHOW CAUSE AS TO WHY T HE ORDER OF ASSESSMENT DATED 7.4.2005 PASSED IN THE ASSESSEES CASE SHOULD NOT BE REVISED AS THE SAME WAS ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF THE REVENUE BECAUSE THE AO MADE ADDITION OF RS.93,94,951 ON BASIS OF SE IZED DOCUMENTS, VIZ., PAGE NOS.246,258,268 AND 270 OF THE SEIZED FILED (M ARKED A-1) WHICH WERE SALE INVOICES OF M/S. SONAL ENTERPRISES RAISED ON T HE ASSESSEE FIRM. SINCE THERE WAS NO EVIDENCE OF PHYSICAL MOVEMENT OF GOODS FROM M/S. SONAL ENTERPRISES TO THE ASSESSEE FIRM AND THE ASSESSEE H AD FAILED TO PRODUCE ANY EVIDENCE IN SUPPORT OF PURCHASES FROM M/S. SONAL EN TERPRISES, THE ADDITION WAS MADE BY THE AO. THE FURTHER CONCLUSION OF THE A O WAS THAT THE ENTIRE TRANSACTIONS OF PURCHASES AND SALES AMONGST THE GRO UP CASES OF M/S. PPL CLEARLY ESTABLISH THAT THESE ARE JUST PAPER CIRCULA TION TRANSACTIONS WITHOUT ANY MOVEMENT OF GOODS FROM ONE PLACE TO OTHER TO RE DUCE THE TAX LIABILITY OF THE GROUP CASES. ON THIS BASIS THE AO TREATED THE PURCHASES TO THE EXTENT OF RS.93,94,951/- WAS BOGUS EXPENDITURE OF THE ASSESSE E FIRM FOR THE BLOCK PERIOD AND ACCORDINGLY, THE SAID AMOUNT WAS ADOPTED AS THE ASSESSEES UNDISCLOSED INCOME OF THE BLOCK. ACCORDING TO THE CIT, IN THE COURSE OF BLOCK ASSESSMENT PROCEEDINGS OF M/S. SONAL ENTERPRISES, I T CAME TO LIGHT THAT DURING THE BLOCK PERIOD UNDER REFERENCE THE SAID PA RTY HAD CLAIMED TO HAVE MADE SALES TO THE TUNE OF RS. 167,76,45,475/- TO TH E ASSESSEE FIRM. THUS, IN THE CASE OF THE ASSESSEE FIRM, PURCHASES TO THE TUN E OF RS. 1,66,82,50,524/- (RS.1,67,76,45,475 LESS RS. 93,94,951/-) WHICH IS S HOWN AS SALES BY M/S.SONAL ENTERPRISES, REMAINED UNVERIFIED BY THE A O WHILE FINALIZING ITS BLOCK ASSESSMENT PROCEEDINGS AND THE ORDER OF THE A O SHOULD BE CANCELLED AND THE AO SHOULD BE DIRECTED TO EXAMINE THE CASE A FRESH. IT(SS)60,61,62 ,110,111 &112/M/08 15 19. IN REPLY THERETO THE ASSESSEE SUBMITTED THAT ( I) THE BLOCK ASSESSMENT ORDER PASSED BY THE AO WAS BARRED BY LIMITATION AND WAS, THEREFORE, VOID AB INITIO AND BAD IN LAW. ACCORDINGLY, THE SAID ORDER CAN NOT BE SUBJECT MATTER OF REVISION U/S. 263 OF THE I.T. ACT. (II) THE AS SESSEE IS IN APPEAL BEFORE THE CIT(A) ON VARIOUS ISSUES RELATING TO JURISDICTION A ND QUANTUM OF ADDITION/DISALLOWANCE AND THE APPEAL IS STILL PENDI NG. THEREFORE, THERE IS NO SCOPE FOR ACTION UNDER SECTION 263. (III) IN THE CO URSE OF THE BLOCK ASSESSMENT PROCEEDINGS THE AO HAD CALLED FOR SPECIF IC INFORMATION AND THE ASSESSEE HAD MADE SUBMISSIONS IN COMPLIANCE. BOOKS OF ACCOUNTS FOR THE BLOCK PERIOD WERE PRODUCED BEFORE THE AO AND ENTRIE S WERE CORRELATED WITH SEIZED DOCUMENTS. THE AO HAD TAKEN A CONSCIOUS DECI SION IN DETERMINING THE ASSESSEES UNDISCLOSED INCOME OF THE BLOCK PERI OD AT RS.93,94,951/- AND NO MORE. 20. THE CIT BY HIS ORDER DATED 12.3.2008 PASSED U/S .263 OF THE ACT, HOWEVER REJECTED THE STAND OF THE ASSESSEE AND HE S ET ASIDE THE ORDER DATED 7.4.2005 AND DIRECTED THE AO TO FRAME A FRESH ASSES SMENT, FOR THE FOLLOWING REASONS: 4.1 THE CONTENTIONS OF THE ASSESSEE HAVE BEEN DUL Y CONSIDERED. IT IS NOTICED THAT THE QUESTION OF LIMITATION WAS RAISED BY THE ASSESSEE BEFORE THE AO IN THE COURSE OF THE BLOCK ASSESSMENT PROCEEDINGS AND THE AO HAD DEALT WITH THAT QUESTION ELABORATELY IN THE BLOCK ASSESSMENT ORDER DATED 07/4/2005 PASSED BY HIM. IN MY CONSIDERED VIEW, THE AO WAS RIGHTLY PERSUADED BY THE DECISION OF THE HONBLE PUNJAB AND HARYANA HIGH COURT IN THE CASE OF JAGJIT SUGAR MILLS CO. LTD. VS. CIT AND OTHERS, (1994) 210 ITR 468, AND TH E DECISION OF THE HONBLE ALLAHABAD HIGH COURT IN THE CASE OF SAHARA INDIA MUTUAL BENEFIT CO. LTD. VS. CIT (2004) 269 ITR 563 TO COM E TO THE CONCLUSION THAT THE TIME LIMIT FOR COMPLETION OF THE BLOCK ASS ESSMENT IN THE PRESENT CASE WAS UPTO 27/4/2005. IN THAT VIEW OF T HE MATTER, THE ASSESSEES PLEA ON LIMITATION IN RESPECT OF ITS BLO CK ASSESSMENT ORDER MERITS REJECTION. FURTHER, IN THE ASSESSEES OWN W ORDS, ITS APPEAL AGAINST THE BLOCK ASSESSMENT ORDER IN ITS CASE IS S TILL PENDING BEFORE THE CIT(A). THUS, THE MATTERS RAISED BEFORE THE SA ID AUTHORITY HAVE NOT BEEN CONSIDERED AND DECIDED. THUS FOLLOWING EXPLAN ATION (C) TO SUB- IT(SS)60,61,62 ,110,111 &112/M/08 16 SECTION (1) OF SECTION 263, THE QUESTION OF MERGER DOES NOT ARISE IN THIS CASE AT ALL. IN THE RESULT, THERE IS NO BAR ON TH E POWER OF THE CIT TO REVISE THE BLOCK ASSESSMENT ORDER, EVEN IF THE SAME IS UNDER APPEAL BEFORE THE CIT(A). NOTWITHSTANDING THE ASSESSEES CONTENTION THAT IT HAD MADE SUBMISSIONS, HAD PRODUCED BOOKS OF ACCOUNT AND HAD CORRELATED ENTRIES WITH SEIZED DOCUMENTS, RECORDS C LEARLY REFLECT THE FACT THAT THERE WAS NOT EVEN A WHISPER FROM THE AS SESSEE ANYWHERE REGARDING THE PURCHASES TO THE TUNE OF RS. 1,66,82, 50,524/- (RS.1,67,76,45,475/- LESS RS. 93,94,951/-) BY IT FR OM M/S. SONAL ENTERPRISES, LET ALONE ANY CORROBORATIVE/SUPPORTING MATERIAL IN EVIDENCE OF ITS CLAIM OF GENUINENESS OF THE PURCHAS E FROM M/S. SONAL ENTERPRISES. AS REGARDS THE ASSESSEES CONTENTION THAT THE AO HAD TAKEN A CONSCIOUS DECISION IN DETERMINING THE ASSES SEES UNDISCLOSED INCOME OF THE BLOCK PERIOD, IT IS EVIDENT FROM THE BLOCK ASSESSMENT ORDER UNDER REFERENCE THAT:- (A) THE ASSESSING OFFICER HAS NOT CONSIDERED THE TOTAL PURCHASES FROM M/S. SONAL ENTERPRISES FOR THE ENTIRE BLOCK PERIOD, (B) THE ASSESSING OFFICER HAS CONSIDERED ONLY ONE SEIZE D DOCUMENT I.E. LOOSE PAPER FILE (MARKED A-1) FOR DETERMINING THE F IGURE OF PURCHASES FROM M/S. SONAL ENTERPRISES, AND (C) THE ASSESSING OFFICER HAS NOT CALLED FOR THE ASSES SMENT YEAR WISE DETAILS OF PURCHASES MADE BY THE ASSESSEE COMPRISIN G THE BLOCK PERIOD. THUS, IT IS INDISPUTABLE THAT THE VERIFICATION, ENQ UIRY AND INVESTIGATION WARRANTED IN THE FACTS AND CIRCUMSTANCES OF THE CAS E WERE NOT MADCE BY THE AO. 5. IN THE LIGHT OF THE DISCUSSION IN THE PRECEDING PARAGRAPHS, THE ASSESSMENT ORDER DATED 07/04/2005 PASSED BY THE AO U/S. 158 BC R.W.S. 144(1)(B) OF THE I.T. ACT IS HEREBY CANCELLE D WITH DIRECTION TO THE AO TO FRAME A FRESH ASSESSMENT ORDER IN ACCORDANCE WITH LAW AND AFTER VERIFICATION, ENQUIRY AND INVESTIGATION WARRANTED I N THE FACTS AND CIRCUMSTANCES OF THE CASE. IN DOING SO, THE AO SHA LL GIVEN REASONABLE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE FIRM. 21. AGGRIEVED BY THE ORDER OF THE CIT PASSED UNDER SEC. 263 OF THE ACT, THE ASSESSEE HAS FILED IT (SS) A. NO.62/MUM/08. 22. THE APPEAL OF THE ASSESSEE FILED AGAINST THE OR DER OF THE AO DATED 7.4.2005 WAS PENDING AND IN THE MEANTIME THE PROCEE DINGS U/S.263 OF THE ACT WERE INITIATED. ON 22.8.2008, THE CIT(A) DISMI SSED THE APPEAL OF THE IT(SS)60,61,62 ,110,111 &112/M/08 17 ASSESSEE AGAINST THE ORDER OF THE AO DATED 7.4.2005 FOR THE REASON THAT BY VIRTUE OF THE ORDER OF THE CIT U/S.263 OF THE ACT, THE ORDER OF ASSESSMENT DATED 7.4.2005 NO LONGER EXISTED AND THEREFORE THE APPEAL OF THE ASSESSEE BECOMES INFRUCTUOUS. 23. AGGRIEVED BY THIS ORDER OF THE CIT(A), THE ASSE SSEE HAS FILED IT(SS) A.NO.111/MUM/08. 24. WE WILL FIRST CONSIDER THE APPEAL AGAINST THE O RDER U/S.263 VIZ., IT(SS) A.NO.111/MUM/08. 25. THE ISSUES THAT HAVE TO BE DECIDED IN THIS APPE AL WOULD BE: 1. WHETHER THE ORDER OF ASSESSMENT PASSED U/S.263 IS BARRED BY LIMITATION FOR THE REASON THAT A) THE AO EXTENDED THE TIME SUO MOTTO FOR COMPLETION OF THE SPECIAL AUDIT U/S.142(2A) OF THE ACT AND WHETHER HE HAS POW ERS TO EXTEND THE TIME SUO MOTTO? B) THE ORDER U/S.142(2A) OF THE ACT WAS ITSELF NOT VAL ID BECAUSE OF THE NON SATISFACTION OF THE CONDITION REGARDING EXISTEN CE OF COMPLEXITY OF ACCOUNTS AND LOSS OF REVENUE AS A CONSEQUENCE OF THE SAME? 2. WHETHER THE ORDER U/S.263 OF THE ACT IS INVALID BE CAUSE THE CONDITION PRECEDENT FOR EXERCISE OF JURISDICTION U/S.263 OF T HE ACT, VIZ., THE ORDER SOUGHT TO BE REVISED SHOULD BE ERRONEOUS AND PREJUD ICIAL TO THE INTEREST OF THE REVENUE WAS NOT SATISFIED? 26. AT THE OUTSET THE LEARNED D.R. OBJECTED TO THE TRIBUNAL DECIDING THE QUESTION WHETHER THE ASSESSMENT ORDER DATED 7.4.200 5 IS BARRED BY TIME FOR THE REASON THAT THE GROUNDS OF APPEAL OF THE ASSESS EE DO NOT SPECIFICALLY CHALLENGE THE ORDER U/S.263 ON THIS GROUND. ON THI S GROUND WE HAVE TO OBSERVE THAT THE GROUNDS OF APPEAL ARE NOT HAPPILY WORDED TO PROJECT THE GRIEVANCE OF THE ASSESSEE IN THIS REGARD. GROUND N O.1 RAISED BY THE ASSESSEE READS AS FOLLOWS: IT(SS)60,61,62 ,110,111 &112/M/08 18 PASSING AN ORDER U/S.263 OF THE I.T.AC 1961 CANCEL LING THE BLOCK ASSESSMENT ORDER DATED 7.04.2005 PASSED BY THE AO U /S.158BC R.W.S.144(1)(B) OF THE ITACT 1961 AS THE PROVISIONS OF THE SAID SECTION 263 ARE NOT ATTRACTED. 27. IN OUR VIEW GROUND NO.1 IS BROAD ENOUGH TO COVE R ALL ASPECTS OF THE VALIDITY OF ORDER U/S.263 OF THE ACT. WE ALSO NOTI CE THAT THE VALIDITY OF THE ORDER U/S.263 OF THE ACT ON THE GROUND THAT THE ORD ER OF ASSESSMENT DATED 7.4.2005 IS ITSELF INVALID BEING ONE PASSED BEYOND THE PERIOD OF LIMITATION LAID DOWN IN SEC.158BE OF THE ACT WAS SPECIFICALLY RAISED BY THE ASSESSEE BEFORE THE CIT IN THE PROCEEDINGS U/S.263 OF THE AC T. THE POWERS OF THE TRIBUNAL U/S.254 OF THE ACT ARE NOT CONFINED TO THE GROUNDS RAISED BEFORE THE TRIBUNAL. IF ULTIMATELY IT IS FOUND THAT THE ORDER OF ASSESSMENT DATED 7.4.2005 ITSELF WAS INVALID BECAUSE IT WAS PASSED B EYOND THE PERIOD OF LIMITATION LAID DOWN IN SEC.158BE OF THE ACT, THEN THE ORDER REVISING THAT ORDER PASSED U/S.263 OF THE ACT WILL ALSO HAVE NO E FFECT. THE ASSESSEE CANNOT PROJECT THIS GRIEVANCE IN ANY OTHER PROCEEDI NGS EXCEPT IN THIS APPEAL AGAINST THE ORDER PASSED U/S.263 OF THE ACT, BECAUS E THE ORDER OF ASSESSMENT DATED 7.4.2005 STANDS CANCELLED BY THE O RDER PASSED U/S.263 OF THE ACT. THE CIT(A) HAS ALREADY DISMISSED THE APPE AL AGAINST THE ORDER OF ASSESSMENT DATED 7.4.2005 HOLDING THAT THE ORDER OF ASSESSMENT HAVING BEEN CANCELLED, THE APPEAL BECOMES INFRUCTUOUS. IN THESE CIRCUMSTANCES, WE REJECT THE PRELIMINARY OBJECTION RAISED BY THE LEAR NED D.R. AND PROCEED TO DECIDE THE VALIDITY OF THE ORDER OF ASSESSMENT DATE D 7.4.2005 ON THE GROUND THAT IT IS BARRED BY TIME. 28. ON THE ISSUE OF LIMITATION WE HAVE ALREADY SEEN THAT THE ON 13.8.2004, THE AO PASSED THE ORDER U/S.142(2A) OF THE ACT, DIR ECTED THE ASSESSEE TO GET ITS BOOKS OF ACCOUNTS AUDITED BY THE SPECIAL AUDITO R BY 17.9.2004. ON 16.9.2004 THE AO EXTENDED THE PERIOD FOR CARRYING O UT SPECIAL AUDIT U/S.142(2A) OF THE ACT, WHICH PERIOD WOULD EXPIRE O N 17.9.2004. THE PERIOD WAS EXTENDED TO 1.11.2004. ON 1.11.2004, THE AO EX TENDED THE PERIOD FOR IT(SS)60,61,62 ,110,111 &112/M/08 19 COMPLETION OF THE SPECIAL AUDIT U/S.142(2A) OF THE ACT, TO 31.12.2004. ON 31.12.2004, THE AO AGAIN EXTENDED THE PERIOD FOR CO MPLETION OF SPECIAL AUDIT U/S.142(2A) OF THE ACT, TO 7.2.2005. ON 10.2.2005, THE SPECIAL AUDITORS INFORMED THE AO THAT THE ASSESSEE HAS NOT CO-OPERAT ED OR RENDERED ANY ASSISTANCE NOR PRODUCED BOOKS OF ACCOUNTS TO CARRY OUT SPECIAL AUDIT U/S.142(2A) OF THE ACT AND THEREFORE THEY ARE UNABL E TO COMPLETE THE SPECIAL AUDIT. ON 7.4.2005, THE AO PASSES AN EX-PARTE BLOC K ASSESSMENT ORDER U/S.144(1)(B) OF THE ACT READ WITH SEC.158BC OF THE ACT. WE HAVE ALREADY HELD THAT THE ASSESSEE DID NOT MAKE ANY APPLICATION FOR EXTENSION OF TIME BEFORE THE AO AND THAT THE EXTENSION OF TIME WAS GR ANTED BY THE AO SUO MOTTO. WE HAVE ALSO SEEN THAT IF THE EXTENSION OF TIME SUO MOTTO BY THE AO IS HELD TO BE INVALID THEN THE ASSESSMENT ORDER PAS SED ON 7.4.2005 WOULD BE BEYOND THE PERIOD OF LIMITATION PRESCRIBED U/S.158B E OF THE ACT AND WOULD ON THAT GROUND BE LIABLE TO BE QUASHED. CONSEQUENT LY, THE ORDER U/S.263 WOULD ALSO BE HELD TO BE INVALID BECAUSE IT SEEKS T O REVISE AN ORDER WHICH IS INVALID. 29. ON THE ISSUE OF LIMITATION, THE PLEA OF THE REV ENUE IS THAT THE AO HAS THE POWER TO SUO MOTTO GRANT EXTENSION OF TIME FOR CARRYING OUT SPECIAL AUDIT U/S.142(2A) OF THE ACT AND IN THIS REGARD THE REVEN UE HAS PLACED STRONG RELIANCE ON THE DECISION OF THE HONBLE PUNJAB & HA RYANA HIGH COURT IN THE CASE OF JAGJIT SUGAR MILLS & CO. (SUPRA). THE FACT S OF THE CASE BEFORE THE HONBLE PUNJAB & HARYANA HIGH COURT WAS AS FOLLOWS: THE ASSESSEE IN THAT CASE CHALLENGED THE VALIDITY AND LEGALITY OF INITIA TING PROCEEDINGS BY ISSUANCE OF NOTICE DATED FEBRUARY 26, 1993, UNDER S ECTION 142(2A) OF THE INCOME-TAX ACT, 1961 (HEREINAFTER REFERRED TO AS 'T HE ACT'), REQUIRING THE PETITIONER TO GET A SPECIAL AUDIT OF ITS ACCOUNTS C ONDUCTED. THE CHALLENGE WAS ON THE GROUND THAT THE ACCOUNTS OF THE PETITIO NER HAVE ALREADY BEEN AUDITED BEING A LIMITED COMPANY AND THE ASSESSING OFFICER ERRED IN PASSING THE ORDER UNDER SECTION 142(2A) OF THE ACT REQUIRI NG THE PETITIONER TO GET A SPECIAL AUDIT. THE HONBLE HIGH COURT REJECTED THE PLEA HOLDING THAT A IT(SS)60,61,62 ,110,111 &112/M/08 20 READING OF THE LANGUAGE OF SECTION 142(2A) OF THE ACT MAKES IT CLEAR THAT IN CASE THE ASSESSING OFFICER AT ANY STAGE OF THE PRO CEEDINGS BEFORE HIM, HAVING REGARD TO THE NATURE AND COMPLEXITY OF THE ACCOUNTS OF THE ASSESSEE AND THE INTERESTS OF THE REVENUE, IS OF THE OPINIO N THAT IT IS NECESSARY SO TO DO, WITH THE PREVIOUS APPROVAL OF THE CHIEF COMMIS SIONER/COMMISSIONER, MAY DIRECT THE ASSESSEE TO GET THE ACCOUNTS AUDITE D BY THE ACCOUNTANT. THE REASONS RECORDED BY THE ASSESSING OFFICER WHICH WE RE DULY APPROVED BY THE CHIEF COMMISSIONER/COMMISSIONER HAVE BEEN ATTACHED WITH THE WRITTEN STATEMENT. THE HONBLE COURT PERUSED THOSE REASONS AND WAS SATISFIED THAT THE ASSESSING OFFICER WAS JUSTIFIED IN FORMING THE OPINION THAT THE ACCOUNTS OF THE COMPANY REQUIRE A SPECIAL AUDIT. THE ASSESS EE RAISED ANOTHER ARGUMENT THAT UNDER SECTION 142(2C) OF THE ACT, TH E PERIOD FIXED BY THE ASSESSING OFFICER FOR THE REPORT UNDER SUB-SECTION (1) WAS THREE MONTHS AND THIS PERIOD COULD NOT BE EXTENDED UNTIL AND UNLESS AN APPLICATION WAS FILED BY THE ASSESSEE FOR EXTENSION OF THE PERIOD. IT WA S CONTENDED THAT THE ASSESSEE DID NOT FILE ANY SUCH APPLICATION AND, TH EREFORE, THE ASSESSING OFFICER ERRED IN EXTENDING THE PERIOD FOR SUBMISSIO N OF THE REPORT OF THE SPECIAL AUDIT UNDER SECTION 142(2A) OF THE ACT. TH E HONBLE COURT REJECTED THIS ARGUMENT HOLDING THAT THE PROVISO TO SUB-SECTI ON (2C) OF SECTION 142 OF THE ACT MAKES IT CLEAR THAT THE ASSESSING OFFICER M AY, EITHER ON THE APPLICATION MADE BY THE ASSESSEE AND/OR FOR ANY GOO D AND SUFFICIENT REASONS, EXTEND THE SAID PERIOD WHICH CANNOT EXTEND TO MORE THAN 180 DAYS FROM THE DATE ON WHICH THE DIRECTION UNDER SECTION 142(2A) IS RECEIVED BY THE ASSESSEE. 30. THE LEARNED COUNSEL FOR THE ASSESSEE RELIED ON DECISION OF BANGALORE TRIBUNAL IN THE CASE OF MADHUVANA HOUSE BUILDING CO -OPERATIVE SOCIETY VS. ACIT 76 TTJ (BANG) 948 AND DELHI TRIBUNAL IN THE CA SE OF SUNDER EXPORTS VS. DCIT 120 TTJ (DEL) 853 WHEREIN AFTER CONSIDER T HE DECISION OF THE HONBLE PUNJAB & HARYANA HIGH COURT IN THE CASE OF JAGJIT SUGAR MILLS CO. LTD.(SUPRA), IT HAS BEEN HELD THAT THE AO HAS NO PO WER TO MAKE SUO MOTTO IT(SS)60,61,62 ,110,111 &112/M/08 21 EXTENSION OF TIME FOR COMPLETION OF THE SPECIAL AUD IT U/S.142(2A) OF THE ACT. WE HAVE PERUSED THE DECISIONS. IN THE FIRST DECISI ON IT WAS SUBMITTED BY THE ASSESSEE IN THAT CASE THAT THE HONBLE PUNJAB & HAR YANA HIGH COURT HAS HELD THAT THE PROVISO TO SUB-SECTION (2C) OF SECTI ON 142 OF THE ACT MAKES IT CLEAR THAT THE ASSESSING OFFICER MAY, EITHER ON TH E APPLICATION MADE BY THE ASSESSEE AND/OR FOR ANY GOOD AND SUFFICIENT REASON S, EXTEND THE SAID PERIOD. THE WORD OR IS NEVER FOUND IN PROVISO TO SEC.142( 2C) OF THE ACT AND TO THIS EXTENT THE DECISION IS PER INCURIAM. THE TRIBUNAL DID NOT CONSIDER THIS PLEA BUT HELD THAT THE ORDER OF ASSESSMENT WAS BARRED BY TIME EVEN AFTER EXCLUDING THE TOTAL PERIOD OF 180 DAYS(SEE PARA-17 OF THE ORDER OF THE TRIBUNAL). IN THE SECOND DECISION THE TRIBUNAL HEL D THAT THE AO HAS NO POWER TO SUO MOTTO EXTEND THE PERIOD FOR COMPLETION SPECIAL AUDIT U/S.142(2A) OF THE ACT. THE TRIBUNAL HELD THAT THE DECISION OF THE HONBLE PUNJAB & HARYANA HIGH COURT IN THE CASE OF JAGJIT S UGAR MILLS CO. (SUPRA) WAS NOT APPLICABLE BECAUSE THE ASSESSEE IN THAT CAS E BASICALLY CHALLENGED THE VALIDITY AND LEGALITY OF INITIATION OF PROCEEDI NGS BY ISSUANCE OF NOTICE U/S.142(2A) OF THE ACT(REFER TO PARA 11 OF THE ORDE R OF THE TRIBUNAL). THE TRIBUNAL FURTHER HELD THAT THE ASSESSEE BEFORE THE HONBLE PUNJAB AND HARYANA HIGH COURT DID NOT CO-OPERATE IN COMPLETING THE SPECIAL AUDIT WHEREAS THE ASSESSEE IN THE CASE BEFORE THE TRIBUNA L FULLY CO-OPERATED AND THEREFORE EXTENSION OF TIME BY THE AO SUO MOTTO WAS HELD TO BE INVALID. THUS BOTH THE DECISIONS OF THE TRIBUNAL REFERRED TO ABOV E CANNOT BE SAID TO BE STRICTLY APPLICABLE TO THE FACTS OF THE PRESENT CAS E, WHERE THE AO HAS SPECIFICALLY HELD THAT THE ASSESSEE IS GUILTY OF NO T CO-OPERATING, IN COMPLETING THE SPECIAL AUDIT. 31. THE LEARNED D.R. PLACED RELIANCE OF THE DECISIO N OF THE HONBLE BOMBAY HIGH COURT IN THE CASE OF CIT VS. GODAVARI DEVI SAR AF 113 ITR 589 (BOM) WHEREIN ORDER OF PENALTY SETTING ASIDE PENALTY-WAS IN CHALLENGE BEFORE THE HONBLE HIGH COURT. THE TRIBUNAL SET ASIDE THE PE NALTY ORDER IN VIEW OF DECISION OF HIGH COURT OF ANOTHER STATE (MADRAS HIG H COURT) HOLDING SEC. IT(SS)60,61,62 ,110,111 &112/M/08 22 140A(3) ULTRA VIRES OF ART. 19(1)(F) OF CONSTITUTIO N. THE HONBLE HIGH COURT HELD THAT THE LAW DECLARED BY HIGH COURT IN A STATE IS BINDING ON TRIBUNAL IN ANOTHER STATE AND THE TRIBUNAL DID NOT GO INTO CONS TITUTIONALITY OF PROVISION OF I.T. ACT AND ONLY DECIDED THE CASE IN ACCORDANCE WITH DECISION OF HIGH COURT. THE LEARNED D.R. SUBMITTED THAT THE LAW DEC LARED BY THE HONBLE PUNJAB & HARYANA HIGH COURT IN THE CASE OF JAGJIT S UGAR MILLS CO. (SUPRA) SHOULD BE FOLLOWED BECAUSE IT WAS THE ONLY DECISION OF HIGH COURT (THOUGH IT IS DECISION OF NON-JURISDICTIONAL HIGH COURT) ON TH E ISSUE. THE LEARNED COUNSEL FOR THE ASSESSEE ON THE OTHER HAND SUBMITTE D THAT THE DECISIONS OF THE HIGH COURT ARE BINDING ON THE SUBORDINATE COURT S AND AUTHORITIES OR TRIBUNALS UNDER ITS SUPERINTENDENCE THROUGHOUT THE TERRITORIES IN RELATION TO WHICH IT EXERCISES JURISDICTION. IT DOES NOT EXTEND BEYOND ITS TERRITORIAL JURISDICTION. THEREFORE THE NON JURISDICTIONAL HIG H COURT DECISION IS NOT BINDING ON THE TRIBUNAL AND IN THIS REGARD RELIED O N THE DECISION OF THE HONBLE BOMBAY HIGH COURT IN THE CASE OF CIT VS. TH ANA ELECTRICITY SUPPLY LTD.206 ITR 727 (BOM). 32. WE HAVE CONSIDERED THE SUBMISSION AND ARE OF TH E VIEW THAT WHERE THERE IS ONLY ONE VIEW TAKEN ON A PARTICULAR ISSUE BY ANY OF THE HIGH COURT/S, FOR THE SAKE OF UNIFORMITY AND JUDICIAL DI SCIPLINE, THE TRIBUNAL SHOULD FOLLOW THE SAME, THOUGH IT MAY NOT BE BINDIN G IN THE STRICT SENSE. IT IS NO DOUBT TRUE THAT BY THE FINANCE BILL 2008, W.E .F. 1.4.2008, SEC.142(2C) HAS BEEN AMENDED TO INCLUDE POWER OF THE AO TO EXTE ND THE PERIOD FOR CARRYING OUT SPECIAL AUDIT U/S.142(2A) OF THE ACT, SUO MOTTO AND THAT THESE PROVISIONS HAVE BEEN EXPLAINED IN CIRCULAR NO.1 DAT ED 27.3.2008 BY THE CBDT TO OPERATE PROSPECTIVELY FROM 1.4.2008. THE L EARNED COUNSEL FOR THE ASSESSEE ALSO RELIED ON THE DECISION OF THE TRIBUNA L IN THE CASE OF SHRI GIAN CHAND VS. DCIT 2010-TIOL 229-ITAT-DEL, WHEREIN THE TRIBUNAL HAS HELD THAT PRIOR TO 1.4.2008, THE AO HAS NO POWER TO EXTE ND THE PERIOD FOR CARRYING OUT SPECIAL AUDIT U/S.142(2A) OF THE ACT, SUO MOTTO . AS ALREADY STATED, WE WOULD PREFER TO FOLLOW THE ONLY VIEW OF THE HONBLE HIGH COURT ON THE ISSUE. IT(SS)60,61,62 ,110,111 &112/M/08 23 WE WILL TAKE UP FOR CONSIDERATION THE NEXT ISSUE VI Z., THE ORDER U/S.142(2A) OF THE ACT WAS ITSELF NOT VALID BECAUSE OF THE NON SATISFACTION OF THE CONDITION REGARDING EXISTENCE OF COMPLEXITY OF ACCOUNTS AND L OSS OF REVENUE AS A CONSEQUENCE OF THE SAME. IT IS THE ARGUMENT OF THE LEARNED COUNSEL FOR THE ASSESSEE THAT AS A CONSEQUENCE TO THE INVALIDITY OF THE ORDER U/S.142(2A) OF THE ACT, THE TIME LIMIT FOR COMPLETING THE BLOCK AS SESSMENT WOULD EXPIRE ON 31.10.2004. 33. THE SUPREME COURT IN RAJESH KUMAR V. DEPUTY CIT [2006] 287 ITR 91(SC) TOOK THE VIEW THAT THE PRINCIPLES OF NATURAL JUSTICE REQUIRED NOTICE TO THE ASSESSEE BEFORE A SPECIAL AUDIT REPORT IS ORDER ED BY THE ASSESSING OFFICER UNDER SECTION 142A OF THE ACT. A DOUBT WAS EXPRESSE D AS TO WHETHER SUCH OPPORTUNITY IS NECESSARY IN EVERY CASE AND THE MATT ER WAS REFERRED TO THE FULL BENCH, WHICH DECIDED THE ISSUE IN SAHARA INDIA (FIRM) V. CIT [2008] 300 ITR 403 (SC). THE SUPREME COURT HELD THAT AN ORDER FOR SPECIAL AUDIT RESULTS IN CIVIL CONSEQUENCES, THOUGH IT IS AN ADMINISTRATI VE ORDER AND THEREFORE THE CONCEPT OF NATURAL JUSTICE HAS TO BE READ IN SUCH A DMINISTRATIVE ACTIONS. BUT WITH A VIEW TO SPARE ACTIONS ALREADY TAKEN, THE SUP REME COURT CLARIFIED THAT ITS RULE WILL APPLY PROSPECTIVELY, (I.E., AFTER 11. 3.2008) SO THAT PAST FAILURES WOULD NOT RENDER THE ASSESSMENTS IN PURSUANCE OF SU CH AUDIT REPORT WITHOUT NOTICE, INVALID. SUCH A VIEW REQUIRING PROSPECTIVE APPLICATION WAS TAKEN IN VIEW OF THE UNCERTAINTY OF LAW IN THIS REGARD THAT EXISTED BEFORE THE HONBLE SUPREME COURT RENDERED ITS DECISION IN THE CASE OF RAJESH KUMARS (SUPRA). THE FINANCE ACT, 2007, HAS INSERTED A PROVISO TO SE C.142(2A) OF THE ACT, W.E.F 1.6.2007 WHEREBY IT IS MANDATORY TO ISSUE OF SHOW-C AUSE NOTICE BEFORE ORDERING SPECIAL AUDIT. THEREFORE THE INVALIDITY OF THE ORDER U/S.142(2A) OF THE ACT ON THE GROUND THAT NO NOTICE WAS GIVEN TO T HE ASSESSEE BEFORE PASSING THE ORDER FOR SPECIAL AUDIT U/S.142(2A) OF THE ACT, CANNOT BE RAISED IN THIS CASE. IT(SS)60,61,62 ,110,111 &112/M/08 24 34. THE NEXT ARGUMENT OF THE LD.COUNSEL FOR ASSESSE E WAS THAT DIRECTION TO GET THE BOOKS OF ACCOUNTS OF THE ASSESSEE SUBJECTED TO A SPECIAL AUDIT WAS NOT VALID BECAUSE THE CONDITIONS NECESSARY FOR INVO KING SUCH POWERS U/S 142(2A) VIZ., (A) NATURE OF ACCOUNTS, (B) COMPLEXIT Y OF ACCOUNTS, AND (C ) INTERESTS OF THE REVENUE ARE NOT FULFILLED IN THE P RESENT CASE. CONSEQUENTLY THE EXTENDED PERIOD OF LIMITATION WAS ALSO NOT AVAI LABLE TO THE AO. IN THIS REGARD, THE LEARNED COUNSEL FOR THE ASSESSEE PLACED RELIANCE ON THE DECISION OF THE HONBLE GUJARAT HIGH COURT IN THE CASE OF AL IDHARA TEXPRO ENGINEERING P.LTD. VS. DCIT 332 ITR 115 (GUJ), WHEREIN THE HON BLE GUJARAT QUASHED THE ORDER OF ASSESSMENT WHICH WAS BASED ON THE SPECIAL ORDER REPORT ON FINDING THAT THERE WAS NO EVIDENCE THAT THE ASSESSING OFFIC ER HAD CONSIDERED ACCOUNTS AND FOUND THEM TO BE COMPLEX. THE ORDER O F SPECIAL AUDIT WAS ALSO HELD TO BE INVALID. THE LEARNED COUNSEL FOR THE AS SESSEE IN THIS REGARD POINTED OUT THAT IN THE COURSE OF SEARCH ALL THE BO OKS OF ACCOUNTS HAVE BEEN SEIZED BY THE AUTHORISED OFFICER CONDUCTING THE SEA RCH U/S.132 OF THE ACT AND THOSE BOOKS WERE IN THE FORM OF CDS. THE CDS WERE PUT ON SEAL AND THE SEAL WAS OPENED ONLY ON 18.10.2004 WHEREAS THE ORDER FOR SPECIAL AUDIT WAS PASSED ON 13.8.2004. IT WAS SUBMITTED BY HIM T HAT THE CONDITION PRECEDENT FOR PASSING AN ORDER U/S.142(2A) OF THE A CT DIRECTING THE ASSESSEE TO GET ITS ACCOUNT AUDITED BY A SPECIAL AUDITOR IS THE SATISFACTION OF THE AO HAVING REGARD TO THE NATURE AND COMPLEXITY OF THE A CCOUNTS OF THE ASSESSEE AND THE INTEREST OF THE REVENUE, THAT IS NECESSARY GET THE ASSESSEES ACCOUNT AUDITED BY A SPECIAL AUDITOR. IT WAS SUBMITTED BY HIM THAT WHEN THE BOOKS OF ACCOUNTS OF THE ASSESSEE WHICH WERE IN CD FORMAT WERE NOT OPENED TILL 13.8.2004, THE AO COULD NOT HAVE FORMED SUCH OPINIO N. IT WAS SUBMITTED BY HIM THAT THE ASSESSING OFFICER HAS NOT BEEN ABLE T O SHOW THAT THE ACCOUNTS OF THE ASSESSEE WAS EVER CONSIDERED BY THE ASSESSIN G OFFICER, AND THEREAFTER HAVING REGARD TO THE COMPLEXITIES OF THE SAID ACCOU NTS HE HAD FORMED AN OPINION TO HAVE THE SAID ACCOUNTS REQUIRE TO BE SPE CIALLY AUDITED. IT WAS ARGUED THAT IN THE ABSENCE OF THE PREREQUISITE COND ITIONS OF THE PROVISION BEING FULFILLED, THE ACTION OF THE AO DIRECTING THE ASSESSEE TO GET ITS ACCOUNT IT(SS)60,61,62 ,110,111 &112/M/08 25 AUDITED BY A SPECIAL AUDITOR SHOULD BE HELD TO BE B AD IN LAW AND CONSEQUENTLY THE ORDER OF ASSESSMENT SHOULD ALSO BE HELD TO BE BARRED BY TIME AS THE AO CANNOT HAVE THE BENEFIT OF EXTENDED PERIOD OF LIMITATION PURSUANT TO AN ILLEGAL ORDER U/S.142(2A) OF THE ACT . 35. THE LEARNED D.R. DREW OUR ATTENTION TO PARA 5.1 OF THE AOS ORDER AND SUBMITTED THAT THE AO HAS RECORDED THE REQUIRED SAT ISFACTION IN THIS REGARD IN THE ORDER OF ASSESSMENT. THE FOLLOWING ARE THE RELEVANT OBSERVATIONS OF THE AO. 5. SIMULTANEOUSLY, A PROPOSAL DATED 5/8/2004 WAS SENT TO THE COMMISSIONER OF INCOME TAX, CENTRAL IV, MUMBAI FOR APPROVAL FOR CONDUCTING A SPECIAL AUDIT UNDER SECTION 1442(2A) O F THE INCOME TAX ACT OF THE ASSESSEES BOOKS OF ACCOUNTS FOR THE BLO CK PERIOD VIS--VIS THE SEIZED PAPERS, DOCUMENTS AND C.DS. IT WAS DULY ANALYSED IN THE PROPOSAL THAT THE ASSES SEE WAS INDULGING INTO BOOKING OF BOGUS PURCHASES FROM ITS OWN ASSOCI ATE CONCERNS SO AS TO REDUCE ITS TAXABLE INCOME. IT WAS ALSO DISCOVE RED FROM THE SEIZED DOCUMENTS THAT THE ASSESSEE ENTERED INTO CIRCULAR T RANSACTIONS WITH IT ASSOCIATE CONCERNS SO AS TO BOOK LOSSES. SPECIAL A UDIT WAS REQUIRED TO UNVEIL THE MULTIPLE ENTRIES OF CIRCULATION OF VARIO US PRODUCTS AMONGST ITS ASSOCIATE CONCERNS AND TO TRADE THE ULTIMATE BE NEFICIARY. THEREFORE, IN VIEW OF THE REFERRED ANOMALIES, DETAI LED PROPOSAL WAS FORWARDED TO THE COMMISSIONER OF INCOME TAX, CENTRA L IV, MUMBAI FOR THE SANCTION OF SPECIAL AUDIT U/S. 142(2A) OF THE I .T. ACT. THE PROPOSAL FOR SPECIAL AUDIT WAS SENT DUE TO NATURE AND COMPLE XITY OF THE INSTANT ASSESSEES ACCOUNTS AND TO PROTECT THE INTEREST OF REVENUE. 36. WE HAVE ALREADY SEEN THAT THE ASSESSEES ACCOUN TS WERE IN THE FORM OF CDS AND WERE SEIZED DURING THE SEARCH AND PUT ON S EAL. THESE CDS WERE OPENED ONLY ON 18.10.2004 IN THE PRESENCE OF WITNES SES ON BEHALF OF THE ASSESSEE. IN SUCH CIRCUMSTANCES WE FAIL TO UNDERST AND AS TO HOW THE AO ON 5.8.2004 WHEN HE SENT A PROPOSAL FOR SPECIAL AUDIT TO CIT COULD HAVE LOOKED INTO THE ACCOUNTS OF THE ASSESSEE AT ALL. IT IS OB VIOUS THAT THE ORDER FOR SPECIAL AUDIT HAS BEEN PASSED WITHOUT FULFILLMENT O F THE REQUISITE IT(SS)60,61,62 ,110,111 &112/M/08 26 PRECONDITIONS AS CONTEMPLATED U/S.142(2A) OF THE AC T. IN THIS REGARD THE AO IN PARA 4 OF THE ASSESSMENT ORDER LAST SENTENCE OBS ERVED AS FOLLOWS: THE CASE WAS GETTING BARRED BY LIMITATION OF TIME ON 31.10.2004. INSPITE OF AVAILING THE REASONABLE OPPORTUNITY OF B EING HEARD THE ASSESSEE HAS REPEATEDLY FAILED TO COMPLY WITH THE T ERMS OF NOTICE ISSUED U/S.143(2) AND 142(1) OF THE I.T.ACT. 37. IMMEDIATELY THEREAFTER THE AO HAS IN PARA-5 REF ERRED THE CASE FOR SPECIAL AUDIT U/S.142(2A) OF THE ACT. IN OUR VIEW THE CONDITIONS PRECEDENT FOR PASSING AN ORDER U/S.142(2A) OF THE ACT DIRECT ING THE ASSESSEE TO GET ITS ACCOUNT AUDITED BY A SPECIAL AUDITOR VIZ., THE SATI SFACTION OF THE AO HAVING REGARD TO THE NATURE AND COMPLEXITY OF THE ACCOUNTS OF THE ASSESSEE AND THE INTEREST OF THE REVENUE, THAT IS NECESSARY GET THE ASSESSEES ACCOUNT AUDITED BY A SPECIAL AUDITOR IS NOT FULFILLED IN THE PRESEN T CASE AND THEREFORE THE REFERENCE TO SPECIAL AUDIT IS HELD TO BE INVALID. CONSEQUENTLY, THE EXTENDED TIME AVAILABLE FOR PASSING THE ORDER OF ASSESSMENT IN TERMS OF SEC.158BE OF THE ACT CANNOT ALSO BE AVAILED BY THE AO. THE ORDE R OF ASSESSMENT IS THEREFORE HELD TO BE BARRED BY LIMITATION. THE ORD ER OF ASSESSMENT IS THEREFORE INVALID AND THE CONSEQUENT ACTION U/S.263 OF THE ACT SETTING ASIDE SUCH INVALID ASSESSMENT CANNOT ALSO BE SUSTAINED. 38. THE LEARNED COUNSEL FOR THE ASSESSEE AND THE LE ARNED D.R. ADDRESSED ARGUMENTS ON THE VALIDITY OF THE ORDER PASSED U/S.2 63 OF THE ACT ON MERITS ALSO. SINCE WE HAVE DECIDED THE ISSUE ON THE QUEST ION OF LIMITATION OF THE ASSESSMENT ORDER THAT WAS REVISED U/S.263 OF THE AC T, WE HAVE NOT DEALT WITH THOSE SUBMISSIONS. 39. FOR THE REASONS STATED ABOVE, THE APPEAL OF THE ASSESSEE CHALLENGING THE PROCEEDINGS U/S.263 OF THE ACT AS INVALID IS AL LOWED AND THE ORDER U/S.263 OF ACT IS HEREBY QUASHED. IT(SS)60,61,62 ,110,111 &112/M/08 27 40. AS FAR AS IT(SS)A.NO.111/MUM/08 IS CONCERNED, W E HAVE ALREADY SEEN THAT THE CIT(A) DID NOT DECIDE THE APPEAL OF THE AS SESSEE FOR THE REASON THAT THE ORDER OF ASSESSMENT HAS BEEN CANCELLED U/S.263 OF THE ACT. THE ORDER U/S.263 OF THE ACT, HAS NOW BEEN QUASHED AND THEREF ORE IN NORMAL CIRCUMSTANCES, THE APPEAL WOULD BE DECIDED BY DIREC TING THE CIT(A) TO DECIDE THE APPEAL ON MERITS. WE HAVE WHILE DECIDING THE A PPEAL AGAINST THE ORDER U/S.263 OF THE ACT, ALREADY HELD THAT THE ORDER OF THE AO WAS BARRED BY LIMITATION. THEREFORE THERE WOULD NO USEFUL PURPOS E IN SETTING ASIDE THE ORDER OF CIT(A) AND DIRECTING HIM TO DECIDE THE APP EAL ON MERITS AFRESH. WE THEREFORE ALLOW THE APPEAL OF THE ASSESSEE AGAINST THE ORDER OF THE CIT(A) CHALLENGING THE ORDER OF THE AO, HOLDING THAT THE O RDER OF ASSESSMENT IS BARRED BY TIME. 41. CONSEQUENTLY, BOTH THE APPEALS BY THE ASSESSEE ARE ALLOWED. 42. IT(SS) A NO.61/MUM/08 IS AN APPEAL BY THE ASSES SEE AGAINST THE ORDER DATED 12.3.2008 OF CIT(A), CENTRAL-IV, MUMBAI , PASSED UNDER SEC. 263 OF THE ACT. 43. IT(SS) A.NO.112/MUM/08 IS ALSO AN APPEAL FILED BY THE ASSESSEE AGAINST THE ORDER DATED 22.8.2008 OF CIT(A), CENTRA L-III, DISMISSING THE APPEAL OF THE ASSESSEE AGAINST THE ORDER OF THE AO 44. THE ASSESSEE IS A PARTNERSHIP FIRM. IT DEALS I N BULLION AND PRECIOUS METALS. THE PARTNERS OF THE ASSESSEE FIRM ARE (1) M/S.NOVICE INVESTMENTS PVT. LTD. (2) M/S.SEMANTEZ INVESTMENTS PVT.LTD. AND (3) M/S. FANCIER INVESTMENTS PVT.LTD. ALL THE PARTNERS OF THE ASSES SEE FIRM WERE GROUP COMPANIES OF PAREKH GROUP IN WHICH MRS.NAINA PAREKH , MRS.KALAWATI PAREKH AND MRS. MEENA PAREKH ARE DIRECTORS. THERE WAS A SEARCH AND SEIZURE CONDUCTED U/S.132 OF THE INCOME TAX ACT, 19 61 (THE ACT)ON 24/09/2002 IN THE CASE OF M/S.PAREKH PLATINUM LIMIT ED, COVERING IT(SS)60,61,62 ,110,111 &112/M/08 28 RESIDENTIAL AND BUSINESS PREMISES BELONGING TO PARE KH FAMILY. SINCE THE ASSESSEE WAS ALSO PART OF PAREKH GROUP, THE BUSINES S PREMISES OF THE ASSESSEE WAS ALSO SEARCHED ON 24/9/2002. 45. ACCORDING TO THE AO, IN THE COURSE OF SEARCH AN D SEIZURE ACTION, VOLUMINOUS INCRIMINATING DOCUMENTS WERE FOUND AND S EIZED. MAINLY ASSESSEES BOOKS OF ACCOUNT WERE ALSO SEIZED IN THE FORM OF C.D.S AND HARD- DISK. 46. THE AO MADE ASSESSMENT IN THE CASE OF THIS ASSE SSEE ALSO ON THE SAME BASIS ON WHICH THE ASSESSMENT WAS MADE IN THE CASE OF THE ASSESSEE IN IT (SS) A.NO.112/MUM/08. THE SEQUENCE OF EVENTS AND O THER ALL OTHER FACTS AND DATES ARE IDENTICAL TO THE SAID CASE, EXCEPT TH E QUANTUM OF ADDITION MADE. THE ABOVE ORDER OF AO WAS REVISED BY THE CIT IN EXERCISE OF POWERS U/S.263 OF THE ACT. ALL THE DATES AND EVENTS AND V ERBATIM THE SAME AS IN THE CASE WHICH WE DECIDED IN IT(SS) A.NO.111/MUM/08 AND IT(SS) A.NO.62/MUM/08. THE PARTIES ADOPTED THE ARGUMENTS ADVANCED IN THE CASE OF IT(SS) A.NO.111/MUM/08 AND IT(SS) A.NO.62/MUM/08 . 47. FOR THE REASONS STATED WHILE DECIDING IT(SS) A. NO.111/MUM/08 AND IT(SS) A.NO.62/MUM/08, BOTH THE APPEALS OF THE ASSE SSEE ARE ALLOWED. THE ORDER U/S.263 OF THE ACT, IS QUASHED AND THE ORDER OF ASSESSMENT IS HELD TO BE BARRED BY LIMITATION. CONSEQUENTLY, THE APPEAL AGAINST THE ORDER OF THE CIT(A) CHALLENGING THE VALIDITY OF THE ASSESSMENT M ADE IS ALSO ALLOWED. IN THE RESULT, BOTH THE APPEALS BEING IT(SS) A.NO.1 12/MUM/08 AND IT(SS) A.NO.61/MUM/08 ARE ALLOWED. 48. IT(SS) A NO.60/MUM/08 IS AN APPEAL BY THE ASSES SEE AGAINST THE ORDER DATED 12.3.2008 OF CIT(A), CENTRAL-IV, MUMBAI , PASSED UNDER SEC. 263 OF THE ACT. IT(SS)60,61,62 ,110,111 &112/M/08 29 49. IT(SS) A.NO.110/MUM/08 IS ALSO AN APPEAL FILED BY THE ASSESSEE AGAINST THE ORDER DATED 22.8.2008 OF CIT(A), CENTRA L-III, DISMISSING THE APPEAL OF THE ASSESSEE AGAINST THE ORDER OF THE AO. 50. THE ASSESSEE IS A PARTNERSHIP FIRM. IT DEALS I N BULLION AND PRECIOUS METALS. THE PARTNERS OF THE ASSESSEE FIRM ARE (1) M/S.NOVICE INVESTMENTS PVT. LTD. (2) M/S.EXHALE INVESTMENTS PVT.LTD. AND ( 3) M/S. FANCIER INVESTMENTS PVT.LTD. ALL THE PARTNERS OF THE ASSES SEE FIRM WERE GROUP COMPANIES OF PAREKH GROUP IN WHICH MRS.NAINA PAREKH , MRS.KALAWATI PAREKH AND MRS. MEENA PAREKH ARE DIRECTORS. THERE WAS A SEARCH AND SEIZURE CONDUCTED U/S.132 OF THE INCOME TAX ACT, 19 61 (THE ACT)ON 24/09/2002 IN THE CASE OF M/S.PAREKH PLATINUM LIMIT ED, COVERING RESIDENTIAL AND BUSINESSS PREMISES BELONGING TO PAR EKH FAMILY. SINCE THE ASSESSEE WAS ALSO PART OF PAREKH GROUP, THE BUSINES S PREMISES OF THE ASSESSEE WAS ALSO SEARCHED ON 24/9/2002. 51. ACCORDING TO THE AO, IN THE COURSE OF SEARCH AN D SEIZURE ACTION, VOLUMINOUS INCRIMINATING DOCUMENTS WERE FOUND AND S EIZED. MAINLY ASSESSEES BOOKS OF ACCOUNT WERE ALSO SEIZED IN THE FORM OF C.D.S AND HARD- DISK. 52. THE AO MADE ASSESSMENT IN THE CASE OF THIS ASSE SSEE ALSO ON THE SAME BASIS ON WHICH THE ASSESSMENT WAS MADE IN THE CASE OF THE ASSESSEE IN IT (SS) A.NO.112/MUM/08. THE SEQUENCE OF EVENTS AND O THER ALL OTHER FACTS AND DATES ARE IDENTICAL TO THE SAID CASE EXCEPT THE QUANTUM OF ADDITION MADE. THE ABOVE ORDER OF AO WAS REVISED BY THE CIT IN EXERCISE OF POWERS U/S.263 OF THE ACT. ALL THE DATES AND EVENTS AND V ERBATIM THE SAME AS IN THE CASE WHICH WE DECIDED IN IT(SS) A.NO.111/MUM/08 AND IT(SS) A.NO.62/MUM/08. THE PARTIES ADOPTED THE ARGUMENTS ADVANCED IN THE CASE OF IT(SS) A.NO.111/MUM/08 AND IT(SS) A.NO.62/MUM/08 . IT(SS)60,61,62 ,110,111 &112/M/08 30 53. FOR THE REASONS STATED WHILE DECIDING IT(SS) A. NO.111/MUM/08 AND IT(SS) A.NO.62/MUM/08, BOTH THE APPEALS OF THE ASSE SSEE ARE ALLOWED. THE ORDER U/S.263 OF THE ACT, IS QUASHED AND THE ORDER OF ASSESSMENT IS HELD TO BE BARRED BY LIMITATION. CONSEQUENTLY, THE APPEAL AGAINST THE ORDER OF THE CIT(A) CHALLENGING THE VALIDITY OF THE ASSESSMENT M ADE IS ALSO ALLOWED. 54. IN THE RESULT, BOTH THE APPEALS BEING IT(SS) A. NO.110/MUM/08 AND IT(SS) A.NO.60/MUM/08 ARE ALLOWED. 55. IN THE RESULT, ALL THE APPEALS ARE ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON TH E 20 TH DAY OF MAY, 2011. SD/- SD/- (J.SUDHAKAR REDDY ) (N.V.VASUDEVAN) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI, DATED. 20 TH MAY.2011 COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3 . THE CIT CITY CONCERNED 4. THE CIT(A)- CONCERNED 5. THE D.RJ BENCH. (TRUE COPY) BY ORDER ASST. REGISTRAR, I TAT, MUMBAI BENCHES MUMBAI. VM. IT(SS)60,61,62 ,110,111 &112/M/08 31 DETAILS DATE INITIALS DESIGNATION 1 DRAFT DICTATED ON 13/5/11 SR.PS/PS 2 DRAFT PLACED BEFORE AUTHOR 18/5/11 SR.PS/PS 3 DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER JM/AM 4 DRAFT DISCUSSED/APPROVED BY SECOND MEMBER JM/AM 5. APPROVED DRAFT COMES TO THE SR.PS/PS SR.PS/PS 6. KEPT FOR PRONOUNCEMENT ON SR.PS/PS 7. FILE SENT TO THE BENCH CLERK SR.PS/PS 8 DATE ON WHICH THE FILE GOES TO THE HEAD CLERK 9 DATE OF DISPATCH OF ORDER